In 2017 we were lucky enough to have three extra days to file our tax returns for 2016. This year’s deadline of April 18 gave procrastinators a full 72 additional hours to file their tax returns with the IRS. Despite this extra time, millions still missed the annual filing deadline.
If you missed the 2016 filing deadline, it is not too late to take action. While the IRS may impose late filing and late payment penalties upon you, this does not mean that you should not make an effort to come into compliance as soon as possible. For those that failed to file on time, the IRS offers the following recommendations:
If you owe federal income tax it is essential that you file and pay as soon as possible. Doing so will minimize any penalties and interest that the IRS will assess. Keep in mind that if you owe money and if you file late that you will be penalized for both filing late and paying late. If you are entitled to a refund, there is no penalty for filing late. If you file your tax return for 2016 sixty or more days after the due date or the extended due date, the minimum penalty is $205.00. If you owe less than $205.00, your penalty will be 100 percent of the unpaid tax. The penalty for filing late is 5 percent of the unpaid tax each month, up to a maximum of 25 percent. The penalty for late payment is 0.5 percent of the unpaid tax per month, up to a maximum of 25 percent. If both penalties apply at the same time, the maximum that can be charged in that month is 5 percent.
Just about any taxpayer can use IRS Free File to e-file their federal tax returns. For those who earn less than $64,000.00 annually, a free tax filing software is available. For those who earn over $64,000.00, Free File Fillable Forms to e-file are available. Fillable forms use electronic versions of IRS paper forms. Fillable forms work well for those who normally do their own taxes. Both of these options are available up to the October 16, 2017, filing extension deadline. Whether you choose to use IRS Free File or a tax return preparer, IRS e-file is available through October 16, 2017. According to the IRS, “E-file is the easiest, safest and most accurate way to file a tax return.”
If you can’t pay your tax liability in full, don’t panic. However, you should always pay as much as you can. The IRS is willing to work out installment agreements with taxpayers, but you must adhere to the terms and conditions of the installment agreement and act in good faith. The IRS offers several ways to pay, including electronic payment options, direct debit and check or money orders. The IRS may also be willing to enter into an Offer in Compromise with those that owe money to the IRS. An Offer in Compromise allows you to cut a deal with the IRS to pay significantly less than what you owe. Not all taxpayers are eligible for an Offer in Compromise. The tax attorneys at Patrick T. Sheehan & Associates can perform a thorough financial analysis to determine if you are eligible for an IRS Offer in Compromise.
If you owe money to the IRS or the Illinois Department of Revenue, hiring a qualified tax attorney to represent you is essential. Chicago tax attorneys Patrick T. Sheehan & Associates assists clients with unfiled tax returns and all types of unpaid tax debts and penalties. Call us, we can help.